Source: David Gray/Reuters
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  • Stakeshop is looking to shake up Australia’s growing neo-broker sector by launching the country’s cheapest brokerage service
  • Operating as Stake since 2017, it’s known among investors in Australia and New Zealand primarily as commission-free retail broker for US-listed stocks
  • Transactions will remain commission-free until the end of the year, after which Stake’s fee of $3 per trade will take effect
  • CommSec’s tiered prices range from $10 to $29.95 for each trade worth up to $1000 or $25,000, respectively
  • With roughly 360,000 users, trading activity on the app has grown 100-fold to more than US$1 billion (A$1.36 billion) per month since its launch

Stakeshop, the online investing platform backed by US investment firm Tiger Global, said this morning it would launch Australia’s cheapest brokerage service as it looks to shake up the growing neo-broker sector.

Operating as Stake since 2017, the platform is known among investors in Australia and New Zealand primarily as commission-free retail broker for US-listed stocks.

It’s a direct challenge to Commonwealth Bank’s subsidiary CommSec, currently Australia’s largest online and mobile broker, as well as other large competitors that have dominated the local market for years.

“I don’t think there’s been material change in the industry since brokerage went electronic in the late ’90s and early 2000s,” said Matt Leibowitz, Stake’s Sydney-based founder and chief executive. “So I think 25 years on, this is a big moment.”

The platform operates in US dollars and traders are charged 0.7 per cent on fund transfers between Australian and American currency. With roughly 360,000 users, trading activity on the app has grown 100-fold to more than US$1 billion (A$1.36 billion) per month since its launch.

The brokerage for Australian-listed stocks will be powered by Finclear, a broker-dealer 16 per cent owned by Magellan Financial Group. Trading in ASX stocks will also be CHESS-sponsored, meaning transactions will be under the person’s own name, not a separate legal entity, as is commonly done by low-cost brokers seeking to keep costs down.

Transactions will remain commission-free until the end of the year, after which Stake’s fee of $3 per trade will compare to CommSec’s tiered prices that range from $10 to $29.95 for each trade worth up to $1000 or $25,000, respectively.

“I think this will accelerate us towards the top,” Mr Leibowitz said. “We’ll hopefully be banging down the door of number one, that would be the goal.”

As of June 30, CommSec held a 5.4 per cent market share in terms of the value of Australian stocks traded, according to Commonwealth Bank’s annual report. Its share of the newer online brokerage sector, however, is estimated to be close to 40 per cent, having opened more than 550,000 client accounts in fiscal 2021.

In June, New York-based Tiger Global led a $40 million Series A equity-raising for Stake, which currently has 75 staff and also operates in Britain and Brazil.

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